Giving video-game makers a head start Having built a successful enterprise at the heart of the video-game industry, a Calabasas software company is creating a high-tech "incubator" to help up-and-comers survive the withering recession.
Emergent Game Technologies - whose customers include video game heavyweights Disney, Google, Electronic Arts, Mythic, Take Two and THQ - hopes to give other companies a boost while continuing to build on its own success.
"What Emergent allows us to do is be more efficient in our production process and really focus on what we do best, which is design games and build them," said Norvell Thomas, vice president of business development and marketing for WhiteMoon Dreams in Pasadena, one of the companies that will benefit from the game-production incubator.
Even avid gamers might not recognize Emergent's name, but there's a good chance they've used Gamebryo, the company's core product, which drives the action in 250 titles and is being used on 150 games in development.
Essentially, designers use Emergent's software as a basic platform to create a game, saving them from having to start from scratch writing lines of code and allowing them to focus more on creative aspects such as storylines and characters.
"In order to make a game, you have to have tons of technology," said Emergent CEO Geoffery Selzer. "We build the deep, deep technology that make the games run."
Gamebryo is used in games that run on Playstation 2, XBox 360, personal
computers and Wii.
Gamebryo was recently used as the development platform for the next-generation title "Civilization Revolution" by Firaxis and by EA-Mythic on its successful title, "Warhammer Online: Age of Reckoning."
Today, Emergent is announcing its development of Gamebryo Lightspeed, which will be rolled out later this month at the Game Developers Conference in San Francisco.
Emergent calls Lightspeed "a quantum leap forward in game development technology."
Hundreds of millions of dollars are being spent on redundant game technology development worldwide, Selzer said, and Lightspeed could cut those costs by allowing developers to create games in any genre on any console or PC platform.
"We're not suggesting there are jobs to be lost in the industry; we're offering the solution to redirect that talent into creative endeavors, and we have numerous programs and efforts to support these studios," Selzer said.
Last month, Emergent secured more than $12.5 million in venture capital after convincing investors that Gamebryo LightSpeed will bring in even more business.
"It took us a long time to put that money together," Selzer said. "It was one of the hardest things we ever pulled off. We had a couple of deals blow up in our face."
One went poof last September right after the U.S. House of Representatives rejected the first financial bailout plan as Selzer and Emergent president Scott M. Johnson were heading to a celebratory lunch.
"Within five minutes of that my phone rang and the lead investor had pulled out," Selzer recalled.
Selzer, the former vice president of creative development and production for Disney Interactive, credits a "perfect storm" of pressures in the video game industry and the pending release of a new Emergent product with attracting the funding.
Hopewell Ventures was the biggest investor in this fundraising round. The others were Worldview Technology Partners, Jerusalem Venture Partners, Walker Ventures and Adena Ventures.
Hopewell Ventures is based in Chicago and typically invests in Midwest companies. It likes the promise in Gamebryo Lightspeed.
"We are looking very carefully at every investment we make these days," Thomas Parkinson, partner at Hopewell Ventures, said in a statement.
He also noted that the market for middleware is expanding and Emergent's products make it easier to produce games.
"We believe the new technology (Gamebryo Lightspeed) Emergent plans to release shortly will establish the company as the leader in the middleware industry," Parkinson said.
Using the new product means publishers can invest more tech time on story lines and graphic features rather than the nuts and bolts that drive the action.
"For the first time the growth in production costs are outstripping the growth in revenue," said Johnson, a former vice president and chief financial officer for Universal Interactive.
Johnson said that it now costs $15 million to $30 million to build one game, while "World of Warcraft" was a $100 million investment.
Analysts see a healthy, worldwide market for development platforms and tools over the next five years.
"As game developers search for options to cut costs and reduce expenses in 2009, more of them will be looking to third-party game middleware companies like Emergent to help cut development time, free up engineering resources and increase efficiency," said Christine Arrington, a senior analyst with Acacia Research Group in Vancouver, Wash.
The middleware that performs these tasks is likely to remain solid through these hard economic times, and strong growth is expected during during the next five years, Arrington said.
Last year, entertainment software sales totaled a record $11.7 billion, up 23 percent from 2007, according to the Entertainment Software Association.
This suggests that the sector's job base will be growing, too.
From 2002 to 2006, direct employment for the industry grew at an annual rate of 4.4percent, the association said. Currently, the sector has 80,000 employees but by the end of this year it could grow to 250,000 jobs with an average salary of $92,300.
California, Washington, Texas, New York and Massachusetts account for 70 percent of the industry's employment.